Minister Dawson to the Secretary of State.

No. 125.]

Sir: Continuing the subject of my No. 123, of the 1st instant, the modus vivendi for the Dominican debt and custom-houses, I have the honor to confirm your telegram, as follows:

Washington, April 3, 1905.

Dawson, Minister, Santo Domingo:

The President has selected for principal collector at the port of Santo Domingo Col. George R. Colton, who has had seven years successful service as customs collector at Manila and Iloilo, Philippine Islands. He thinks it would be wise to place the other four collectors—one at Samana, one at Sanchez, one at Macoris, and one at Azua—under Colton as principal collector, and the two collectors now collecting at Monte Christi and Puerto Plata also to be subordinate to Colton. In order that the system should be complete, there should also be to assist Colton and staff one statistician, one accountant, and one stenographer. The question of salary is an important one. Suggest that the principal collector receive a salary of $500 a month and that the salaries of the others be fixed by agreement between the President and principal collector on his arrival after consideration of the receipts at each port. Assume that traveling expenses from the United States to and from Santo Domingo will, of course, be met by Government of Santo Domingo.

Answer promptly whether these suggestions meet with the approval of the President.

The President designates the City National Bank of New York as the depositary.

Loomis, Acting.

The next morning (the 5th) I had a long conference with President Morales and the minister of finance. They made no serious objection to the salary proposed for Colonel Colton, although the minister of finance doubtless feels that it is unjust that he himself should receive less than half the amount agreed upon for the American receiver. Neither did I have any difficulty in securing an agreement that traveling expenses should be met.

The Department’s suggestion that all the ports should be under the supreme direction of a single chief collector, with an office in this city, had already been covered by the form in which the Executive resolution (inclosure 3 with No. 123) was drawn. The advisability of such centralization of accounts and organization is obvious and indisputable.

But we got upon delicate ground when we began discussing the probable functions and authority of the deputy which they admitted it would be necessary for Colonel Colton to have at each port. The President seemed at first to think that these deputies should be appointed by him after consultation with Colonel Colton, but I gave him clearly to understand that while we were not disposed to stick on a mere question of the form of the appointment, Colonel Colton must have a real liberty to select his subordinates. The minister of finance then called my attention to the fact that since the modus vivendi existed by virtue of a mere exchange of notes and an Executive resolution, and not by virtue of any treaty, law, or constitutional provision, the Dominican Executive could not legally name the deputies as custom-house interventores—the title of the regular Dominican collectors—and displace the persons now holding those positions. What was true of the interventores was also true of the minor employees. Knowing how vitally important this question of patronage is to the Morales Government, and that a sudden discharge of the present custom-house employees would probably give rise to serious [Page 368]embarrassments and even grave disorders, I answered that my government would not be found to be disposed to disturb the existing functionaries except in so far as it might prove in practice necessary for the purpose of securing a collection of the full legal duties, so that the creditors would receive the full proportion which had been pledged and promised to them by the modus vivendi; that only a practical expert after studying for himself the actual conditions could tell just what action must be taken to achieve this result; but that it was clear to me, and I believed ought to be equally clear to them, that deputies responsible directly to Colonel Colton should be stationed at all the ports and that such officials should have the power to inspect and regulate everything that goes on in the custom-houses. I added that the exercise of such power by Colonel Colton and his deputies would be as beneficial to the interests of the Dominican Government as to those of the creditors, because the American officials would be in a position to do what no Dominican Government had ever done or could perhaps ever do—that is, put a stop to preferential contracts in favor of large and powerful importers, and prevent competition among the different custom-houses for imports by varying constructions of the tariff laws.

The minister of finance then said that he would welcome the assistance of the American officials in these vital matters, especially now that he knew they would be honorable people who would come here without other interests or purpose than to represent the President of the United States in his effort to relieve the Dominican Government and its creditors from their intolerable situation. His chief purpose was fundamentally the same as Colonel Colton’s would necessarily be, and he pledged his hearty cooperation. Colonel Colton could freely form his own organization and would be given every facility for the effective performance of his functions. When Colonel Colton should arrive—which he hoped would be immediately—they would come at once to a preliminary agreement as to salaries and as to the practical relations which the American deputies shall bear to the Dominican custom-house employees.

He also referred to the difficulties in the way of making a smooth transition from the Michelena contract, under which the government is receiving a fixed sum of $75,000 a month and which is yet largely unliquidated, to the modus vivendi, under which the government will get 45 per cent of a revenue whose exact amount is uncertain. To this I answered that these difficulties were merely ones of detail, and that since Mr. Michelena was so well disposed toward the government and the modus vivendi, he would surely cooperate with Colonel Colton and with the Dominican Government and in the meantime would supply the ready money necessary for daily expenses.

The President asked me for an assurance that my government understood that the expenses for salaries, etc., were to be paid out of the 55 per cent which the Dominican Government sets aside for its creditors. I answered that in my telegraphic dispatch submitting the proposition for the modus vivendi I had inadvertently omitted to make mention of expenses, but that I had since sent my government a copy of the Executive resolution of April 1, which is clear on the point; that it was unlikely that any misapprehension could exist, since in both the treaty and in the Michelena contract it had been provided that expenses of collection should be met out of the 55 per cent and the Dominican Government receive 45 net.

[Page 369]

This closed the interview, and I immediately sent you the following telegram:

Santo Domingo, April 5, 1905.

Secretary of State, Washington:

Dominican President appoints Colton general receiver all customs revenues, with power to select necessary deputies and assistants after consultation with minister of finance. Your suggestions as to salary and expenses accepted, payable out of 55 per cent. No objection to one deputy for each port and assistants as suggested. They request Colton to come immediately and study the situation before deciding details. Economy and caution are very important.

Dawson.

I also made the indication of Colonel Colton for the position of general receiver and the designation of the City National Bank of New York as depositary matters of record by sending to the minister of foreign affairs the notes of which I inclose copies, to which I received favorable replies. Copies and translation inclosed.

I have; etc.,

T. C. Dawson.
[Inclosure 1.]

Minister Dawson to General Sanchez.

Mr. Minister: I have the honor to inform your excellency that the President of the United States recommends to the favorable consideration of the Dominican Government Col. George R. Colton for appointment as receiver of revenues under the provisions of the recent financial modus vivendi. At a subsequent time, and after consultation with your excellency’s government, Colonel Colton will select and present for favorable consideration such deputies and assistants as may be found necessary and arrange the details as to the performance of his and their functions.

I improve, etc.,

T. C. Dawson.
[Inclosure 2.—Translation.]

General Sanchez to Minister Dawson.

Mr. Minister: I have the honor of communicating to your excellency that the Dominican Government has accepted with real satisfaction the designation made by His Excellency the President of the United States in favor of Col. George R. Colton to receive the customs revenues of the Republic in conformity with the first article of the resolution adopted on the 31st of March.

By this notification I answer your excellency’s note of the 5th instant.

I improve, etc.,

Juan Fco. Sanchez.
[Inclosure 3.]

Minister Dawson to General Sanchez.

Mr. Minister: I have the honor to inform your excellency that the President of the United States has designated the City National Bank of New York as the depositary for that proportion of the Dominican revenues which are to be devoted to the payment of the creditors of the Dominican Government under the provisions, of the recent financial modus vivendi.

I improve, etc.,

T. C. Dawson.
[Page 370]
[Inclosure 4.—Translation.]

General Sanchez to Minister Dawson.

Mr. Minister: I have the honor to advise your excellency that I have received your kind note of the date of 5th of this month announcing that His Excellency the President of the United States of America had designated the City National Bank of New York as depositary of the portion of the Dominican revenues which are to be destined to the payment of our creditors.

I have given the information to my government and I am gratified to announce its complete acceptance.

I salute, etc.,

Juan Fco. Sanchez.